A sensible approach to AI, sustainability
In today's boardrooms, two topics dominate discussions: AI and sustainability. However, instead of viewing these as mere costs, boards must recognise them as strategic investments essential for longterm success. Yet, for boards to effectively navigate the complexities, literacy in these areas is paramount. Boards must familiarise themselves with the nuances of AI, including its ethical implications, security challenges, and potential biases.
In corporate strategy, the distinction between costs and investments often blurs. However, when it comes to AI and sustainability, the delineation is clear and crucial. These are not merely items of expenditures in the PL statement but rather longterm investments. It is always smart on putting money on decisions that would fetch sustained state of solvency and resilience.
Resilience must be boards’ guiding principle. Technology, particularly AI, offers immense potential to not only meet these requirements but also drive innovation and productivity.
However, embracing AI also requires a cautious approach. Trust in AI tools must be tempered with a healthy dose of scepticism, given the ongoing challenges surrounding AI security. Building a culture of innovation and risk appetite among staff is paramount to navigating this. Furthermore, the pervasive issue of bias in AI algorithms poses significant ethical concerns, potentially perpetuating and exacerbating existing inequalities. Moreover, the opacity of AI decisionmaking processes raises questions about accountability and transparency. We should prioritise rigorous scrutiny, robust safeguards, and ongoing ethical reflection to mitigate these risks and ensure that AI
Must handle AI with care
serves as a force for good rather than a source of harm.
Both AI and sustainability represent not only opportunities but also significant risks for boards if mishandled. Failure to effectively address these topics can result in reputational damage, regulatory scrutiny, financial losses, and even existential threats to organisations. Inadequate AI governance may lead to privacy breaches, algorithmic bias, or security vulnerabilities, eroding consumer trust and exposing companies to legal liabilities. Likewise, neglecting sustainability imperatives can result in supply chain disruptions, resource scarcity, and adverse environmental impacts, compromising longterm viability and shareholder value.
To mitigate these risks, boards must prioritise robust governance frameworks, proactive risk management, and stakeholder engagement. This entails establishing clear policies and oversight mechanisms for AI deployment, including ethical guidelines and cybersecurity protocols. Similarly, boards must integrate sustainability considerations into strategic decisionmaking processes, ensuring alignment with ESG goals.
Mishra is senior BFSI sector governance and surveillance specialist and Sridharan is policy researcher and corporate advisor. Their views are personal